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How strong is the USD?

By Moderator on Friday, August 15, 2008 @ 8:10 AM :: 0 Comments

I have heard a lot of talk about dollar strength for the last few weeks. Current market conditions lead me to question if we are really looking at a strong dollar or is everything else is just falling apart.

I think over all the dollar has a slight strength but the mass majority of the sell off has been due to weak economies around the world. The Euro zone and UK are both showing signs of recession and are hard pressed to get any positive economic data over the last two months. The NZD and AUD central banks are both leaning towards a rate cutting cycle.

The Yen is our one major currency that is not suffering massive turmoil and is probably a good gage of the true value of the USD. If the USD is leading the trend or not is good to know because it helps us see if we are finally at the bottom of the USD or just waiting for the next wave of panic to start.

There is no question at this point that the US is currently in better shape than most in the currency basket. Let us not forget that just because everyone else seems to be in worse shape doesn’t mean the US in good shape. US economic data is still in the dumps and has been for quite sometime. The US was first to lead into this market turmoil in doing so it was like dropping a Mac truck into the world economies pond and we are just starting to see the waves hit the bank.

Just some historic market levels to keep in mind.

On 4/24/08 oil was trading around 113.50 same as today, gold was trading around $880 currently trading around $792, EUR/USD was around 1.5600 currently 1.4750, GBP/USD was around 1.9650 currently around 1.8600 and DOW was trading around 12,700 currently around 11,650.

Happy Trading

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